It's Time to Fight Back
Louisiana Motor Transport Association Pursues Legislative Relief from Skyrocketing Commercial Liability Insurance Costs
During 2018’s regular legislative session, the Louisiana Motor Transport Association (LMTA) worked to advance bills that would have provided relief from increasing liability insurance rates for the state’s commercial trucking industry, arguing companies should be responsible for the true extent and actual cost of damages.
House Bill 789, sponsored by Rep. Major Thibaut (D-New Roads), sought to limit the recovery for medical expenses to the amount actually paid to the healthcare provider, while Senate Bill 382, sponsored by Sen. Sharon Hewitt (R-Slidell), would have allowed juries to be told about seat belt usage in determining comparative negligence.
Both bills failed to pass.
“Our industry is in crisis on the insurance front,” said LMTA Executive Director Chance McNeely. “We had two very common sense pieces of legislation this year that got nowhere. These are things we can do to help bring insurance providers into the Louisiana market. The Legislature must take this issue seriously.”
“For as bad as auto insurance rates are in Louisiana, it’s even worse for trucks,” he said.
“I’ve never seen a crisis like the trucking industry faces today with liability insurance,” said Doug Place, retired chief financial officer of Dupré Logistics, a trucking company in Lafayette. “Providers have become scarce and rates continue to increase putting Louisiana-based companies at a major competitive disadvantage to companies in other states.”
Even though fatal accidents involving trucks in the United States have dropped 71 percent since 1975, and Louisiana is below the national average in fatal accidents involving trucks, rates keep going up. McNeely said the state’s commercial trucking industry has a target on its back.
“Providers have become scarce and rates continue to increase putting Louisiana-based companies at a major competitive disadvantage to companies in other states.”
“If you’ve ever driven down the road or watched TV in our state you understand the advertising campaigns that exist for litigation,” McNeely said. “One of the largest causes of our insurance crisis is the litigious environment that exists in Louisiana.”
In Louisiana, he said, claims are routinely higher in volume and cost than the insurer anticipated. That causes insurance companies to increase premiums for everyone or stop doing business in the state.
Rep. Thibaut said the state is down to only four insurance carriers who will write policies for big rigs. That’s left truckers and trucking companies with limited options and high costs.
“If this isn’t a crisis (already), it’s coming,” he said.
As an industry standard, each truck operating in Louisiana carries at least $1 million in liability insurance. Some carriers have additional policies to ensure greater coverage.
The environment for insurance is so bad that some trucking companies have considered moving out of state.
“One of the largest causes of our insurance crisis is the litigious environment that exists in Louisiana. Our insurance rates are astronomical and keep going up every year.”
McNeely said one LMTA member, who has a fleet of 100 trucks in northwest Louisiana, was told if he moved his business across the Texas border he could save $5,000 per truck, per year in insurance premiums.
“That’s $500,000 right off his profit margin,” he said.
Another member carries up to $5 million in coverage.
“He hasn’t filed a claim and his insurance premium went up over $200,000 this year. It’s killing the industry.”
He is concerned that many in the trucking industry will move out of state or sell their businesses to out-of-state companies.
“From a tax base perspective, you want those companies to not just do business in Louisiana, you want them to be here. If a company can move to Texas and keep the work they’ve had delivering in Louisiana, why wouldn’t they? They’ll earn more profit and their taxes will go to Texas.”
House Bill 789 proposed limiting jury awards to plaintiffs for the actual cost of medical procedures. For instance, if someone is injured, receives medical treatment and is billed $50,000, the defendant owes $50,000. The problem is that the bill for $50,000 also included write-downs of $25,000 based on pre-established contractual agreements between insurers and providers. The plaintiff was only ever responsible for $25,000. The extra $25,000 was never paid by or owed to anyone.
Under current state law, the plaintiff can recover the gross bill, not the actual bill,” said LMTA General Counsel Doug Williams.
“With write offs, which nobody has to pay and nobody ever pays, you have no third party paying those amounts. The write offs and write downs are now considered part of the phantom damages, and those are what’s being recovered. This causes damage to the business community.”
“We’re not trying to leave any plaintiff out of pocket,” he said. “We’re trying to limit recovery to real damages.”
There were 27 green cards submitted by various business organizations in favor of the bill. Only the trial lawyers were opposed to the bill, submitting two red cards. The Chairman of the House Civil Law committee, Rep. Ray Garofalo (R-Chalmette), who supported HB 789, moved to voluntarily defer the bill as a courtesy. This gave LMTA the opportunity to try and convince enough committee members to support the measure and then reconsider the bill. That effort was not successful.
Senate Bill 382 attempted to give judges permission to tell juries if a plaintiff was wearing a seatbelt. The public policy of the state is that all negligence of all parties should be considered in determining comparative fault, but there is an exemption for seat belt usage in the law. This bill removed that exemption and could have potentially reduced the amounts paid out by defendants.
“Seatbelt usage is proven to save lives and reduce injury,” Place said. “It’s about presenting all of the evidence in a case.”
According to the National Highway Transportation Safety Administration (NHTSA), the risk of fatal injury is reduced by 45 to 60 percent and the risk of moderate to critical injury is reduced by 50 to 65 percent by wearing a seatbelt.
“The likelihood of more serious injury exists when you’re not wearing your seatbelt,” Hewitt said. “We think this is a common-sense bill. It certainly exists in other states. It supports current state law requiring seatbelt use. It makes sense because you’re giving the juries the best information they need to make the best decisions possible going forward.”
In testifying before the senate transportation committee, Louisiana Commissioner of Insurance Jim Donelon said, “To the extent that this bill is effective in lowering awards for failure to use seatbelts, the benefit will flow to all drivers insured in Louisiana because the first basis for rate increases is loss experience paid by insurers doing business in our state. If their losses are less, their justification for rate increases is lower.”
Donelon said as many as 55 percent of Louisiana drivers are underinsured or not insured at all. The state is consistently among the top 10 most expensive states to procure auto insurance, with a 1999 AAA report citing New Orleans and Baton Rouge, respectively, the most expensive cities for auto insurance. Lawsuits are the main reason. In his testimony, he said Farm Bureau Louisiana is grouped with six other Southern states and makes up about 17 percent of the company’s business in the region, but makes up 51 percent of the company’s pending lawsuits.
“Our percentage of litigation over auto policies is way off the charts compared to the other states,” he said. “It’s three times our proportional share.”
Donelon could not predict how much rates could be lowered by adopting the bill, but he said if it lowers awards it would lower rates.
HB 382 was involuntarily deferred, killing the bill, with only Senators Jack Donahue and Danny Martiny voicing support for the measure.
“LMTA will be back every year until we get these issues resolved. We won’t stand idly by while our Louisiana based trucking companies are pushed out of their home state,” said McNeely.
House Civil Law Committee – Where HB 789 Died
Raymond Garofalo Jr.
Sam Jenkins Jr.
Senate Judiciary A Committee – Where SB 382 Died
Rick Ward III